20 Warehouse Management Best Practices

20 Warehouse Management Best Practices

Nalini
Nalini
Table of Contents
Table of Contents

If you are a business owner or manager, you know that warehouse management is one of the key aspects of your company. It's important to have an effective system in place to organize and store your products, so that they are available when you need them and can be delivered on time.

Warehouse management involves setting up systems for organizing and storing products, so that they are accessible and meet the needs of the business. There are a variety of best practices that you should follow if you want to manage your warehouse effectively.

There are a number of best practices that you should use when managing your warehouse, if you want it to run smoothly.

Following these guidelines will help you to organize your products and keep them available when you need them. By following these tips, you can ensure that your products arrive on time and meet the needs of your customers.

Let's look at the list that we will discuss further in detail:

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What is Warehouse Management?

Warehouse management is the process of managing the receipt and storage of materials, their movement within the warehouse, and their shipment to customers or other locations. It also includes the management of inventory control, order fulfillment, and material handling.

Warehouse Management is a Critical Component of the Supply Chain!

Furthermore, warehouse management is a critical component of the supply chain as it involves the coordination of goods in and out of the warehouse. This includes coordinating the movement of goods from the manufacturing facility to the warehouse and then on to customers. It also involves tracking and managing the storage of goods, as well as the safe and secure handling of materials in the warehouse.

Additionally, warehouse management involves the tracking of inventory levels, measuring and controlling inventory costs, and ensuring the accuracy of inventory records.

20 Warehouse Management Best Practices

Check out the list of best practices for managing a warehouse below, which we'll go over in extensive detail in this guide.

20 Warehouse Management Best Practices!

1. Inventory Tracking

Inventory tracking in warehouse management is the process of tracking inventory levels, orders, sales and deliveries. It helps monitor and control inventory levels, maximize warehouse space utilization, improve customer service, and reduce inventory costs.

The primary purpose of inventory tracking is to ensure accurate and timely inventory information is available to all stakeholders in the supply chain. This includes warehouse staff, supply chain managers, and customers.

Warehouse management systems (WMS) are used to track inventory levels and movements within the warehouse. The WMS may include barcode scanners, RFID readers, manual entry, and other inventory tracking technologies.

Inventory tracking systems help warehouse managers to identify and resolve bottlenecks, improve inventory accuracy, and reduce out-of-stocks. They also help identify and resolve discrepancies between physical and system inventory levels.

Inventory tracking systems should provide real-time visibility into inventory levels. It further allows to make better decisions and improved customer service.

2. Prioritize Automation

Automation in warehouse management can help to improve accuracy, reduce costs, and increase efficiency. Automated warehouse management systems can help to streamline the processes associated with inbound and outbound shipping and inventory tracking.

Furthermore, automation can help to eliminate manual data entry, reduce errors, and speed up the process of order fulfillment and inventory tracking. It helps to reduce the need for physical storage space by using automated systems to store data and inventory.

Automation can also help to improve accuracy by providing real-time updates on the status of orders and inventory. This can help to reduce stockout or out-of-stock (OOS) issues.

Ultimately, every stage of the process, involving picking, packing, and delivering items as well as placing orders and managing returns, may be made more efficient with the use of automated data gathering and scanning.

Implementing automation may speed up operations, track vital data, and reduce errors that can occur with manual entry because it is the key to success and the direction the world is headed in.

3. Incorporating the Best Warehouse Management System (WMS)

A Warehouse Management System (WMS) is a software system designed to support and optimize the storage, retrieval, and tracking of items stored in a warehouse. It is used to manage inventory, track shipments, monitor product movement, and manage personnel.

Investing in a better WMS can provide many benefits to a business. It can help streamline operations, reduce costs, and improve customer service. A better WMS can also help manage stock levels, reduce errors, and improve order accuracy.

In order to reap the full benefits of a better WMS, it is important to select the system that is best suited to the needs of the business. Some of the features to consider when selecting a WMS include:

Some of the features to consider when selecting a WMS include:

1. Productivity: A WMS should provide features that enable efficient handling of inventory and warehouse operations. This includes features such as automated replenishment, order picking and packing, automated data capture, inventory tracking, and order tracking.

2. Scalability: A WMS should be able to scale with the changing needs of the business. It should be able to accommodate additional warehouse locations, product lines, and features as the business grows.

3. Security: A WMS should have features that ensure the security of data and inventory. This includes features such as authentication, data encryption, and access control.

4. Integration: A WMS should be able to integrate with other business systems, such as enterprise resource planning (ERP) and customer relationship management (CRM) systems. This will enable the business to get the most out of their WMS.

5. Reporting: A WMS should have features that enable the generation of reports and analytics. This will help the business gain insight into their operations and make data-driven decisions.

6. Cost: A WMS should be affordable for the business, without compromising on features or quality.

4. Applying the ABC Analysis Approach to Organize your Warehouse

ABC analysis is a popular technique used in supply chain management for analyzing and categorizing inventory items. It is used to identify items that will have the greatest impact on overall inventory cost and determine the best management strategies for those items.

In warehouse management, ABC analysis in inventory control can help you better manage the storage and movement of inventory in your warehouse. It can help you develop an effective inventory control system and identify opportunities for cost savings.

ABC analysis divides items into three categories based on their value and importance. The three categories are A, B, and C.

Category A: These are high-value items that have a significant impact on inventory cost. These items are typically high-volume, fast-moving items that are in high demand. These items should have the highest priority when it comes to inventory management.

Category B: These are medium-value items that have some impact on inventory cost. These items typically have lower demand than Category A items but still require careful management to ensure that they are in stock when needed.

Category C: These are low-value items that have a minimal impact on inventory cost. These items typically have low demand and can be managed with a lower level of priority.

Once you have identified which items belong to which category, you can easily organize your inventory items.

By performing an ABC analysis on your inventory and commodities, you may find out which of them are the most sought-after, most valuable, and everything in between. Make sure the C products are the easiest to obtain since they will receive the majority of orders.

Despite what would appear clear, it is often less efficient to organize inventory by vendor. Moving the high-volume items close to the packing stations will speed up order fulfillment.

5. Tracking Warehouse KPIs

KPIs (key performance indicators) are an important tool for measuring and evaluating the performance of a warehouse management system. KPIs enable warehouse management to identify areas of improvement and make changes to improve the overall efficiency of the warehouse.

The following are some of the most important KPIs for warehouse management:

1. Inventory Turnover: This KPI measures how quickly inventory is being sold, processed, and replaced.

2. On-time Delivery: This KPI measures the percentage of orders that are delivered to customers as scheduled.

3. Order Fulfillment Accuracy: This KPI measures the accuracy of order fulfillment processes.

4. Warehouse Utilization: This KPI measures the amount of space being used in the warehouse and the efficiency with which it is being used.

5. Cycle Time: This KPI measures the time it takes to complete an order from start to finish.

6. Employee Productivity: This KPI measures the efficiency and effectiveness of warehouse employees.

7. Labor Costs: This KPI measures the cost effectiveness of labor in the warehouse.

8. Shipping Cost: This KPI measures the cost of shipping products to customers.

9. Receiving Accuracy: This KPI measures the accuracy of receiving shipments from suppliers.

10. Quality Control: This KPI measures the quality of products stored in the warehouse.

The most important element is data tracking includes KPIs. Therefore, managers and team leaders will be partially responsible for acquiring the actual data and reporting it to the business metrics. The team may be motivated and held accountable as a result. Setting and exceeding quarterly goals may improve your entire workflow.

6. Utilize Robotics to Increase Effectiveness

Robotics can be used in warehouse management to automate various processes and tasks. This could include automated picking and packing, inventory tracking and sorting, and even delivery of goods.

Robotics can also help reduce human labor costs and increase efficiency by automating mundane tasks. It can also be used in warehouse management to improve safety and security, as well as to monitor and control access to certain areas.

Additionally, robotics can be used to monitor environmental conditions in warehouses, ensuring that goods are stored at the proper temperature and humidity levels. Eventually, robotics can be used to track and analyze data to help managers make better decisions about inventory levels and storage strategies.

For the best outcomes, you should incorporate modern software technologies into your warehouse management. Adopting technology will be a smart way to finish tasks rather than depending on a labor-intensive and ineffective human staff.

Many business activities that could otherwise take considerable time can be automated and expedited by technology. Once you begin integrating technology and robotics in your warehouse management, you may also eliminate the possibility of error and defects.

You will invest in warehouse management robotics since doing so can only be beneficial. When orders for your company's products increase, you will need more efficient personnel or software, in this case, to track products, handle order picking, and ship them more promptly to their destinations. The potential for growth and expansion for your business will raise the likelihood of success.

7. Consider Adopting Blockchain Technology for Data Security

Blockchain technology can provide data security for warehouse management. Moreover, blockchain is a secure, distributed ledger system that records and stores data in a secure and immutable way.

By using blockchain, warehouses can securely track and store information about the items stored in their warehouses, including inventory levels, locations, prices, and other data. Additionally, blockchain can be used to facilitate secure payments and transactions between warehouses and their customers.

This technology can also be used to ensure data integrity, providing an extra layer of security against unauthorized changes or deletions. Furthermore, blockchain can be used to provide a secure, audit trail of all warehouse transactions, allowing warehouses to easily monitor and detect any suspicious activities. The use of blockchain technology can greatly improve data security in warehouse management.  

This further ensures that all stakeholders have access to the same information and that any discrepancies are quickly identified and addressed. Additionally, blockchain's encryption capabilities ensure that the data is secure and cannot be altered or accessed by unauthorized parties.

Finally, blockchain's distributed ledger allows for the efficient tracking and sharing of data, reducing the risk of data breaches or manipulation.

8. Continual Cycle Counting

Cycle counting is an inventory auditing process used in warehouse management where a small subset of inventory is counted on a regular basis rather than all of the inventory at once.

Furthermore, cycle counting is often used to provide more accurate and timely inventory data and to help identify inventory discrepancies. This can help reduce the amount of time and resources needed for physical inventory counts, as well as reduce the chance of inventory discrepancies.

Cycle counting can be done on a daily, weekly, or monthly basis, depending on the size of the inventory and the needs of the business. During a cycle count, a specific number of items are selected and counted. This is usually done with the help of a random number generator or a sampling formula. The counts are then compared to the records in the system to identify any discrepancies and make corrections as needed.

The cycle counting process can be used in combination with other inventory management processes, such as physical inventory counts, to ensure accurate inventory data. Additionally, it can also help to identify any discrepancies between the physical inventory and the records in the system, which can be addressed and corrected quickly.

Regular cycle counts allow for the simultaneous accomplishment of multiple objectives. You can compare the system results with your manual counts. Any irregularities in your software or warehouse management systems may be brought to light by this.

While performing your ABC analysis, you might reorganize your inventory to better fulfill the demand. Last but not least, to ensure that clients receive items that look to have just been manufactured, you might dust, sweep, and clean your warehouse and storage.

9. Lean Warehouse Implementation

The five main principles of lean are value, value stream, flow, pull, and perfection, according to Womack and Jones.

The client's requirement for the good or service determines value.

Value streams describe the process of outlining each step that leads from the beginning to the point where the product is in the customer's hands.

The value stream's most direct and effective path is found before determining the ideal flow. There are several steps in the supply chain, and after you cut the fat from your warehouse operations, you can figure out the best flow for your operations.

Pull refers to having items that clients can "pull from the shelf" as required. This requires seamless coordination between the pricing team, the shipping and receiving team, and the inventory team. Pull can be mastered if everyone works together.

The perfection of lean warehousing is the last stage. In the notion that practice makes perfect, we use the word "perfection." But it should go without saying that we must put up with flawed things because we are human, because technology is developing, and because time is passing.

When putting lean warehousing principles into practice, experts advocate walking through your system at least 10 to 20 times before calling out, identifying, and fixing any value stream issues.

The first four phases must be practiced until you can perform them consistently and as effectively as possible to reach the perfection stage (for the most part).

10. Vendor Compliance

Vendor compliance is a critical aspect of warehouse management that helps ensure the efficient and cost-effective supply of goods and services. Further, vendor compliance helps ensure that vendors are meeting the terms and conditions of their contracts with the warehouse management team.

It also helps to ensure that vendors have the necessary resources and systems in place to effectively manage the supply chain. Vendor compliance can include the implementation of quality control measures, the implementation of inventory tracking systems, and the implementation of vendor performance metrics.

Additionally, vendor compliance can include ensuring that vendors adhere to safety and security protocols, as well as ensuring that vendors are properly trained in the use of the warehouse management system.

11. Cloud-Based Management System

Cloud-based management systems are becoming increasingly important in warehouse management. These systems offer an array of benefits, such as increased visibility, improved accuracy, lower costs, and faster order fulfillment.

They also provide better inventory management, enabling businesses to track orders and products in real-time, as well as quickly identify discrepancies and take corrective action.

Cloud-based management systems are becoming increasingly important in warehouse management!

Additionally, cloud-based systems enable businesses to automate processes, such as order picking, packing, and shipping, resulting in greater efficiency and fewer errors. Furthermore, cloud-based systems offer scalability, allowing businesses to quickly respond to changing customer needs and market trends.

Unlike locally installed programs, cloud-based warehouse management software allows you to pay for the capabilities you need up front and receive upgrades as they become essential in the future.

Remember: You will choose a "package" and pay a single, fixed membership price that best fits the size of your team and your feature requirements. Thus, updating is merely a few clicks away when your business's success calls for an even more gorgeous stage.

Cloud software providers work behind the scenes to ensure efficient operations in addition to upgrades. If you have any questions or require any repairs, they will have a support crew available to assist you.

12. Incorporate leader standard work (LSW)

Leader standard work (LSW) is an important tool for managing warehouses, as it helps ensure that the work of all warehouse staff is done in a consistent and effective manner.

LSW can be used to guide warehouse staff in their daily tasks, such as maintaining inventory levels, loading and unloading trucks, and tracking orders. It can also be used to establish and monitor performance standards. It includes order accuracy, order fulfillment times, and customer service.

By using LSW, warehouse managers can ensure that all employees are working towards the same goals, and that they are following the same procedures. Additionally, LSW can be used to identify areas of improvement and provide feedback to employees on their performance.

The challenge lies in the fact that conventional management approaches fall short of fostering the culture change toward constant problem-solving that is necessary to sustain and accelerate operational advancements. You, as the leader, must alter your behavior to effect change, but not in an impetuous or irrational manner.

Moreover, you need predictable and repeatable standard activities that encourage people's problem-solving skills and move them toward daily continuous improvement, much like operators have standardized work for their value-adding tasks.

Work that meets the standards of a leader facilitates coaching by helping employees develop the problem-solving abilities they need at work. The management tactic known as Leader Standard Work is made up of these actions.

13. Dynamic Slotting

According to Tony Tyler, president and CEO of eF3 Systems, “Slotting choices should be performed dynamically rather than as a batch process. To do this, you need to place the picks by product in one or more ‘look ahead’ scheduled cycles or waves, usually to match the transportation schedule and transit times.”

Dynamic slotting is a warehouse management technique that utilizes artificial intelligence and machine learning to optimize the placement of stock items within the warehouse.

This method of slotting allows for the real-time adjustment of product placement in order to maximize the efficiency of the warehouse. This is done by dynamically considering factors such as inventory turnover, order frequency, item size, and product demand.

By utilizing dynamic slotting, warehouses are able to reduce unnecessary walking and increase their throughput.

When you slot your warehouse depending on demand, you can do it more dynamically than in a batch process by placing picks as-of-product in one or more upcoming cycles or waves. You will have greater freedom and efficiency while making your decision thanks to the fact that they are organized according to shipping and delivery windows.

14. Utilize Cross-Docking

Cross-docking is a logistics process that involves receiving goods from suppliers, sorting them, and then shipping them out to customers with minimal or no storage time.

It is a system that requires coordination between suppliers, warehouses, and customers. Cross-docking is used to reduce warehouse storage costs, speed up the delivery process, and improve customer service. It is a popular warehouse management strategy that helps businesses move goods quickly and efficiently.

Cross-docking is typically used when products have a short shelf-life, require special handling, or need to be shipped immediately. It helps to speed up the delivery process, reduce costs, and improve customer service.

15. Incorporate Advanced Shipping Notification

Advanced Shipping Notification (ASN) is a feature of warehouse management systems (WMS) that allows the warehouse to receive advance notice of a shipment’s arrival.

With ASN, the warehouse receives details about the shipment such as expected arrival date, shipping method, weights, and dimensions. This information is then used to plan the logistics of the warehouse and ensure the shipments are properly stored and tracked.

Advanced Shipping Notification (ASN) is a feature of warehouse management systems (WMS)!

ASN can also be used to generate alerts for potential problems or delays. By providing advance notice, ASN allows the warehouse to better plan for incoming shipments and reduce the risk of delays and lost shipments.

Despite the fact that it would seem obvious, many distribution centers still do not use electronically conveyed early delivery warnings. Regular shipping and receiving schedules aren't always a guarantee because delays and interruptions are a reality that can change such schedules and cause problems across the warehouse.

To more accurately schedule labor, inventory management and buy order procedures can use electronic advanced shipment alerts. Adjustments can be made to order fulfillment and transportation to ensure that the required service time criteria are met and that the transport methods are optimized to cut expenses.

16. Utilize Your Company's Talents Appropriately

While having talented employees in your firm is a plus, if you don't assign them the proper duties, it could cost you money.

Allocating resources to the most favorable place is one of the fundamental tenets of warehouse management. You need to be aware of which talent best matches each allocation and where it can result in the best results.

Be aware of which talent best matches each allocation where they can bring out the best results!

To locate your optimal personnel placements, you must construct talent grids, connect them with the best developed profiles, and then position individuals. This will assist your staff because it will raise their spirits and improve the efficiency of your operations. You must be able to place the people you hire in positions where their skills will be most effectively utilized in addition to hiring the right people.

17. Eliminate Paper Processes

Data entry procedures have changed as a result of the use of warehouse technology. It further allows data to be entered directly into digital storage, reducing the possibility of errors brought on by readability problems, misplaced paperwork, and other problems arising from the conversion of handwritten data into electronic bits and bytes.

Warehouse technology has decreased operational costs by removing the requirement for paper-based processes. It is because businesses no longer have to pay for paper, related stationery, or the provision of pre-printed papers. Less forestry resources are utilized in warehouse operations, which has enhanced their sustainability.

18. Increase Information Sharing Efficiency

It might be really inspiring to set an example for the group using your data and warehouse information numbers. One approach to provide this information is through live dashboards on flat-screen monitors positioned around your warehouse or in important packing sections.

Live data sharing may be an effective motivator for staff members and provide them a sense of knowing about the good work they create if done without putting undue pressure on them. There are displays for pending, packed, and despatched shipments.

Additionally, you can list goods that are en route to the warehouse. If they lack such real-time data flow, they might need to contact individuals in the purchasing departments to learn about fresh purchase orders. This makes the entire process easier. It simplifies everything and provides your warehouse staff with a thorough understanding of the company.

Information can be distributed to all parties involved, retail locations, and the entire business thanks to a warehouse management system.

The reason why this is the best line of action are:

  • Visibility over the entire company
  • Simple inventory levels and location tracking
  • Only one system of records interfaces to ERP or accounting systems for deliveries to or from retail locations.

Cost savings are also possible since inventory is tracked or tagged uniformly throughout the company.

19. Perform Audit Process

The audit process in warehouse management is a systematic approach to examining the accuracy and completeness of warehouse procedures, processes, and operations.

It is an important part of quality assurance. Further, it helps to ensure that all warehouse operations are running as efficiently and accurately as possible.

Audit process in warehouse management is a systematic approach to examining the accuracy!

Below is a step-by-step guide to the warehouse management audit process:

1. Establish Audit Objectives: The first step of the audit process is to determine the objectives of the audit. This includes identifying the scope of the audit, the expected outcomes, and the timetable.

2. Gather Information: The next step is to gather all the necessary documents and data that are relevant to the audit. This includes any policies, procedures, and processes related to warehouse management.

3. Analyze Data: Once the necessary documents and data have been gathered, the auditor will analyze the data to identify any issues or areas of concern.

4. Document Findings: The auditor will document any issues or areas of concern that were identified during the analysis of the data.

5. Develop Corrective Action Plans: After identifying any issues or areas of concern, the auditor will develop corrective action plans to address the issues. This may include changes to procedures, processes, and operations.

6. Present Findings: Present the audit findings and recommendations to management for review.

7. Implement Recommendations: Implement the recommended changes to the warehouse management process. This includes training staff on the new processes and ensuring that the changes are implemented correctly.

8. Monitor Results: Once the warehouse management audit process is complete, it is important to monitor the results and see if any changes need to be made. This should be done periodically to ensure the warehouse continues to operate efficiently and effectively. Additionally, corrective action should be taken when necessary.

20. Focusing on Visibility

Warehouse visibility is the ability to track inventory throughout the supply chain. This includes tracking items from the time of order to the time of shipment, providing visibility into the storage, stocking, and movement of inventory within the warehouse.

Warehouse visibility helps to reduce errors and increase efficiency, as it allows businesses to better manage their inventory and identify potential problems before they become costly. Furthermore, warehouse visibility also enables companies to monitor their inventory levels in real-time and make decisions based on current trends and forecasts.

Moreover, warehouse visibility is typically achieved through the use of technologies such as radio-frequency identification (RFID) tags, bar code scanning, and automated data collection systems.

These tools allow businesses to track individual items, as well as groups of items, throughout the warehouse. With these technologies, it is possible to identify items quickly and accurately, as well as to monitor their locations within the warehouse.

In addition to providing visibility into inventory, warehouse visibility also helps to improve customer satisfaction and increase customer loyalty. By providing customers with accurate and up-to-date information about their orders, businesses can ensure customer satisfaction and build customer loyalty.

For example, customers can easily track their orders, and be notified when their order is ready for shipment. Similarly, customers can be kept informed of any delays or changes in their order status.

Overall, warehouse visibility is an important part of supply chain management, as it helps businesses to accurately track and manage their inventory. By using warehouse visibility technologies, businesses can reduce errors, identify potential problems, and ensure customer satisfaction.

Summing Up

Management teams need to constantly think about how we might do things better. Everyone has to make do with the limited resources at their disposal. Therefore, it is essential to have a strategy in place before taking on new responsibilities and to have the discipline to stay with it.

Remember that there is just one task that has to be finished today in order to keep the company moving in the right direction. We should do fewer "things" than there are actual "things." Too many priorities cause a corporation to lack focus and clarity, which wastes resources and lowers morale. Using the available filters, you may locate the warehouse's greatest opportunities.

You may utilize the aforementioned 20 warehouse best practices to help you determine where your business has the most potential for growth, continually improve, and maintain market competitiveness.

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Final Takeaways

‌‌We've arrived at the last section of this guide. Let's have a look at some of the most important points to remember:

  • Inventory tracking in warehouse management is the process of tracking inventory levels, orders, sales and deliveries. It helps monitor and control inventory levels, maximize warehouse space utilization, improve customer service, and reduce inventory costs.
  • Automation can also help to improve accuracy by providing real-time updates on the status of orders and inventory. This can help to reduce stockout or out-of-stock (OOS) issues.
  • Investing in a better WMS can provide many benefits to a business. It can help streamline operations, reduce costs, and improve customer service. A better WMS can also help manage stock levels, reduce errors, and improve order accuracy.
  • ABC analysis is a popular technique used in supply chain management for analyzing and categorizing inventory items. It is used to identify items that will have the greatest impact on overall inventory cost and determine the best management strategies for those items.
  • For the best outcomes, you should incorporate modern software technologies into your warehouse management. Adopting technology will be a smart way to finish tasks rather than depending on a labor-intensive and ineffective human staff.
  • vendor compliance can include ensuring that vendors adhere to safety and security protocols, as well as ensuring that vendors are properly trained in the use of the warehouse management system.
  • Dynamic slotting is a warehouse management technique that utilizes artificial intelligence and machine learning to optimize the placement of stock items within the warehouse.
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